Are you sure you have a

strategy?

Donald C. Hambrick

James W. Fredrickson

Key learning from an article by Donald C. Hambrick

and James W. Fredrickson from the Academy of
Management Executive magazine 2005 Volume 19,
No.4.
Presented by:-Piyush Pandey
WMG22
Roll#222015

Strategic threads and not Strategy!

Our strategy is to be the low-cost provider.
Were pursuing a global strategy.
The companys strategy is to integrate a set of regional
acquisitions.
Our strategy is to provide unrivaled customer service.
Our strategic intent is to always be the first-mover.
Our strategy is to move from defense to industrial
applications.

 When executives call everything strategy, and end up

with a collection of strategies, they create confusion
and undermine their own credibility. They especially
reveal that they dont really have an integrated
conception of the business.
How does knowing that their firm is pursuing an
acquisition strategy or a first-mover strategy help
the vast majority of managers do their jobs or set
priorities?

Strategy
Strategy is derived from the Greek strategos, or
the art of the general.
A strategy is managements game plan for
Strengthening the organizations competitive position
Satisfying customers

Achieving performance targets

 Business generals, whether they are CEOs of established

firms, division presidents, or entrepreneurs, must also
have a strategy a central, integrated, externally
oriented concept of how the business will achieve its
objectives.

Note!
A strategy consists of an integrated set of choices,
but it isnt a catchall for every important choice an
executive faces.

What is included and excluded from strategy

Strategic Analysis

The key is not in following a

sequential process, but
rather in achieving a robust,
reinforced consistency
among
the elements of the strategy
itself. It is not a linear
process.

Industry Analysis
Customer/marketplace trends
Environmental forecast
Competitor analysis
Assessment of internal
strengths, weaknesses, resources

Strategy
Mission

Fundamental
Purpose
Values

Objectives

Specified
Targets

Mission and objectives stand

apart from and guide strategy.

The central
integrated,
externally
oriented
concept on
how we will
achieve our
objectives

Choices about
internal
organizational
arrangements
are not part of
strategy

Supporting
Organisational
Arrangements

Structure
Process
Symbols
Rewards
People
Activities
Functional
policies and
profiles

The elements of Strategy

Arenas: where will we be active?

Vehicles: how will we get there?
Differentiators: how will we win in the market-place?
Staging: what will be our speed and sequence of moves?
Economic logic: how will we obtain our returns?

Arenas
Where will we be active?
Which product categories?
Which market segments?
Which geographic areas?
Which core technologies?
Which value-creation stages?
How much emphasis will each area receive?
Which areas are most important?
Which areas are peripherally important?

In articulating arenas, it is important to be as specific as

possible about the product categories, market segments,
geographic areas, and core technologies, as well as the
value-adding stages (e.g., product design, manufacturing,
selling, servicing, distribution) the business intends to take
on.

Vehicles
The means for attaining the needed presence in a particular
product category, market segment, geographic area, or valuecreation stage should be the result of deliberate strategic choice.

How will we get to the Areas we have selected?

Internal Development?
Joint Ventures?
Licensing?
Franchising?
Acquisitions?

Differentiators
A strategy should specify not only where a firm
will be active (arenas) and how it will get there
(vehicles), but also how the firm will win in the
marketplacehow it will get customers to come its way.
How will we win consumers in the Areas?

Image?
Customization?
Price?
Style?
Reliability?
Overall Value?

Differentiators Examples
Gillette uses its proprietary product and process
technology to develop superior razor products, which
the company further differentiates through a distinctive,
aggressively advertised brand image.
Goldman Sachs, the investment bank, provides
customers unparalleled service by maintaining close
relationships with client executives and coordinating the
array of services it offers to each client.
Southwest Airlines attracts and retains customers by
offering the lowest possible fares and extraordinary ontime reliability.

Staging
Staging is the speed and sequence of major moves to take in
order to heighten the likelihood of success.

The Factors Driving Staging

Resources
Urgency
Achievement of credibility
The pursuit of early wins

Economic Logic
At the heart of a business strategy must be a clear idea of how
profits will be generatednot just some profits, but profits
above the firms cost of capital.

Examples of Economic Logic

The New York Times is able to charge readers a very high price (and strike
highly favorable licensing arrangements with on-line information distributors)
because of its exceptional journalistic quality; in addition, the Times is able to
charge advertisers high prices because it delivers a large number of dedicated,
affluent readers.

ARAMARK, the highly profitable international food-service company, is able to

obtain premium prices from corporate and institutional clients by offering a
level of customized service and responsiveness that competitors cannot match.
The company seeks out only those clients that want superior food service and
are willing to pay for it.

Examples of Economic Logic

GKN Sinter Metals, which has grown by acquisition to
become the worlds major powdered-metals
company, benefits greatly from its scale in obtaining
raw materials and in exploiting, in country after
country, its leading edge capabilities in metal-forming
processes

Thank You